Prison REITs: The End Is Near
Prison REITs - the darkest corner of the REIT sector - have been slammed in 2020 as pandemic-related operational struggles have clashed with ever-intensifying political headwinds.
Undoubtedly the most controversial real estate sector, Prison REITs have been under assault from the hard-line "cancel culture" that views private prisons as conspirators in a powerful “prison industrial complex”.
While the hard evidence debunks the core claims, these REITs have faced mounting difficulty in accessing capital from an “ESG-focused” institutional investment community, compelling both REITs to slash dividends.
Private prisons are facing an existential crisis if Democrats sweep the 2020 Elections, who have pledged to abolish the Federal use of private prisons, amounting to 50% of industry revenues.
CoreCivic announced it is abandoning the REIT structure, and GEO Group likely isn’t far behind. While intrinsic value exists, these companies will likely face continued difficulty operating as public entities.
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